Bankers urge RBI to keep interest rates stable at its 29 Jan policy review

15 Jan 2010

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Banks on Thursday, urged RBI to keep interest rates stable at its policy review later this month, on concerns that any increase could adversely affecting sluggish demand for loans.

The RBI is widely expected to go for a hike in the cash reserve ratio (CRR), the level of cash banks must keep with the central bank, at its policy review scheduled for 29 January.

Expectations have also been raised of a hike in policy rates on recent strong data and December inflation rate at a one-year high of 7.31 percent.

According to the chairman of a state-run bank, they submitted to the RBI that the time was not right to hike rates and indicate increase in lending rates.

Loan growth in November fell below 10 per cent even on a reduction of 300-350 basis points in lending rates since the start of 2009. Meanwhile, companies in India have been accessing cheaper funds from abroad.

According to bankers the pick-up in annual loan growth to 13.7 per cent was unlikely to sustain as it was caused due to bunching of disbursements ahead of the December quarter end.

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